1. What is Company Car Tax?

Company car tax, also known as Benefit-in-Kind (BIK) tax, is a tax paid by employees who use a company car for private use. The tax is calculated based on the car's list price, CO2 emissions, and the employee's income tax rate.

2. How Does the Calculator Work?

The calculator uses the company car tax formula:

Where:

• \( List Price \) — The manufacturer's list price of the car (GBP)
• \( Benefit \% \) — The Benefit-in-Kind percentage based on CO2 emissions
• \( Tax Rate \) — The employee's income tax rate (%)

Explanation: The calculation determines the taxable benefit value of using a company car for private purposes, which is then subject to income tax and National Insurance contributions.

3. Importance of Company Car Tax Calculation

Details: Accurate company car tax calculation is essential for both employers and employees to understand tax liabilities, make informed decisions about company car schemes, and ensure compliance with HMRC regulations.

4. Using the Calculator

Tips: Enter the car's list price in GBP, the appropriate Benefit percentage based on CO2 emissions, and your income tax rate. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What determines the Benefit percentage?
A: The Benefit percentage is primarily determined by the car's CO2 emissions, with lower emissions resulting in lower percentages. Electric vehicles typically have the lowest rates.

Q2: Are there any exemptions or reductions?
A: Yes, electric vehicles and ultra-low emission cars benefit from reduced rates. Pool cars used strictly for business may be exempt.

Q3: How often is company car tax paid?
A: Company car tax is typically deducted monthly through the PAYE system, similar to income tax.

Q4: What costs are included in the list price?
A: The list price includes the car's basic price plus VAT, delivery charges, and any optional extras fitted before registration.

Q5: Can fuel for private use be taxed separately?
A: Yes, if the employer provides fuel for private mileage, this is taxed as a separate benefit using different calculations.